November 09, 2011

China's Cyber Moves Hurting Beijing

A new report by an arm of the U.S. Director of National Intelligence confirms what officials have privately lamented for several years:  the United States is the target of a vast array of cyber attacks, many focused on stealing intellectual property, originating in China. The report highlights the costs that worry American officials and corporate leaders, including the loss of expensive technology, the theft of military applications, and the undermining of the information-intensive U.S. economy. Indeed, vast economic espionage, conducted largely through cyber-operations, can diminish the United States’ strategic competitiveness. But there’s a flip side to Beijing’s cyber offensive – the strategic costs it imposes on China itself.

To be sure, China isn’t a solitary actor, and Russia and other countries are routinely fingered as major sources of online intrusions and hacking. But in recent years, a multitude of U.S. corporations, universities, government agencies, and other institutions – to say nothing of their counterparts in places like Japan, South Korea, and Europe – have suffered cyber attacks alleged to have originated in China. Indeed, the new report calls Chinese actors “the world’s most active and persistent perpetrators of economic espionage.”

It’s easy to see how this pattern of behavior fits into Beijing’s oft-expressed desire to ascend quickly to global power status. Beijing, as the DNI report notes, is driven by a longstanding desire to attain the levels of economic prosperity enjoyed by the Western powers. This policy motivates many of China’s attempts at online malfeasance, including its efforts to acquire foreign technology, research plans, and proprietary intellectual property.

But this very approach challenges the core of China’s aspirations to a peaceful rise, and may have the effect of increasing the external constraints to that rise.

While a few years ago debate over China oscillated between those seeking to engage Beijing and those wishing to contain it, Washington has settled into a rough consensus on China policy that resembles closely the approach adopted by most Asian nations: deep economic and diplomatic engagement coupled with a strategy to hedge against the possibility of future Chinese aggression. As the United States and a number of Asian nations hedge, they are building up their own or each other’s militaries, deepening their pattern of security cooperation, and expanding their economic linkages. The result is an emerging power web that supplements the traditional hub-and-spoke American alliance system, with the virtual effect of Lilliputians tying down Gulliver.

The determination of other Asian powers to constrain China is driven largely by their assessment of its capability and intent. Chinese military and cyber capability is unquestionably growing; Beijing’s intent is a matter of deeper speculation. Its propensity to make unforced errors and drive suspicion in Asia, however, is not.

In 2010, for example, Beijing managed to offend the Association of Southeast Asian Nation countries by warning them not to coordinate with outside powers (meaning the United States) to address maritime issues in the South China Sea. It alienated the most pro-China Japanese government in recent memory byhalting the export to Japan of rare earth minerals in the midst of a dispute over a detained fishing trawler captain. And it roiled opinion in Seoul when it blocked international condemnation of North Korea’s unprovoked sinking of a South Korean naval vessel and then warned against the South’s subsequent exercises with the U.S. Navy.

Beijing has sought to recover from this string of mistakes and to highlight its considerable soft power. At a time when the United States and Europe are in the economic doldrums, China motors along, and its officials note that the financial crisis started in the West, not the East. Beijing offers an attractive economic model to many developing countries, along with few-strings-attached aid and investment dollars.

Its cyber offensive, though, has the potential to undermine much of this effort. As ever-greater numbers of companies, universities, government agencies, and individuals around the world are subject to Chinese hacking, the effect is to build an ever-larger constituency that is suspicious of Chinese power. Think of it as soft power in reverse – the power of repulsion rather than attraction – or perhaps simply as a titanic public diplomacy nightmare. Either way, by building a large and growing pool of individuals and organizations suspicious of Chinese power, Beijing may inadvertently prod its neighbors to accelerate their manifold hedging behaviors.

Thus far, China has calculated that the benefits are worth the costs. As the DNI report observes, Beijing’s leaders believe that now is the window of strategic opportunity to focus on “economic growth, independent innovation, scientific and technical advancement, and growth of the renewable energy sector.” Its cyber operations are devoted to that effort.

But if they undermine China’s claim to peaceful rise and spur its neighbors to restrain Beijing, it will have produced precisely the behavior least conducive to China’s emergence as a strong, prosperous and resilient global power.